J-Money, Winter 2015-16
After years of discussion and speculation, finally markets gained some clarity about US interest rates in December when the Federal Reserve raised rates for the first time since 2006, to a generally favourable response. That makes it easier to look to the year ahead and assess how Japan, and world markets generally, might fare.
Since we now know what US policy is, it’s interesting to look at the other major economies, starting with Europe. “The tension between solid growth and low inflation within the euro area may shift policy perceptions away from the ‘whatever it takes’ rhetoric of European Central Bank (ECB) president Mario Draghi to something more nuanced, as suggested by the ECB’s latest stimulus package which, to markets’ disappointment, was more muted than expected,” says Guy Bruton, economist at Alliance Bernstein.
Bruton thinks Japan, too, may begin tapering its quantitative easing programme in late 2016. These things will then have knock-on effects elsewhere. “As these jurisdictions inch towards more normal policy settings, the bias within Asia and Australia – where, generally speaking, growth and inflation remain low and downside risks persist – will be towards accommodation and, in some cases, further easing.”